Crypto Use in Human Trafficking Surges
There is growing concern over the use of cryptocurrency in human trafficking, with Chainalysis data reporting an 85% increase in crypto flows to such illicit services. While illicit use is estimated at around 1.2% of total crypto volume, stablecoins dominate 84% of that illegal activity. The trend highlights the need for enhanced anti-money laundering measures in the crypto sector.
- The surge in crypto payments to trafficking services is closely tied to a growing illicit ecosystem in Southeast Asia that includes scam compounds, online gambling sites, and Chinese-language money laundering networks operating on platforms like Telegram. - Analysis of transaction sizes reveals the scale of these criminal enterprises, with nearly half of payments to Telegram-based "international escort" services exceeding $10,000. In contrast, prostitution networks show transactions primarily between $1,000 and $10,000. - While stablecoins like Tether (USDT) are dominant, vendors of child sexual abuse material (CSAM) are increasingly turning to privacy-enhancing coins like Monero. A UN report specifically highlighted that Tether running on the TRON blockchain has become a preferred tool for money laundering and cyber fraud due to its stability, low fees, and transaction speed. - The U.S. Treasury's Office of Foreign Assets Control (OFAC) has been actively sanctioning cryptocurrency exchanges, such as the Russia-based Garantex, for facilitating transactions for ransomware actors and other cybercriminals. These actions prohibit U.S. entities from dealing with the sanctioned organizations. - Beyond trafficking, state actors like North Korea increasingly use stablecoins to evade international sanctions, funding activities such as weapons programs. - In response to the growing illicit use of stablecoins, U.S. lawmakers introduced the Guarding the United States Against Illicit and Unlawful Stablecoins (GENIUS) Act, which would require stablecoin issuers to register with the Department of the Treasury. - Traffickers utilize cryptocurrencies to purchase advertisements for victims on the dark web and receive payments from buyers for premium memberships on review websites. Law enforcement has noted cases where criminals use layers of transactions, such as buying prepaid credit cards, using them to purchase bitcoin, and then using the bitcoin for sex ads, to obscure the money trail. - FinCEN, a bureau of the U.S. Treasury Department, saw the number of human trafficking-related Bank Secrecy Act (BSA) reports involving virtual currency increase from 336 to 1,975 between January 2020 and December 2021.
